Kaley v. United States: A 'Frightening' Ruling

In a vital case on whether courts should be able to freeze the assets of criminal defendants before trial, the U.S. Supreme Court made a troubling decision last week. In a 6-3 vote in Kaley v. United States, the Court held that defendants cannot use a pretrial hearing to challenge a grand jury’s finding that there was probable cause they committed a crime, triggering forfeiture of assets. The ruling is a frightening one for those concerned with prosecutorial and government overreaching.

The defendants, a New York couple, were indicted on charges of reselling stolen medical devices. After the grand jury’s indictment, a federal trial court – at the request of prosecutors - froze their assets, which included funds they intended to use to pay their defense attorney – totaling more than $2 million. The couple argued that they were entitled to a hearing to challenge the grand jury’s probable cause determination.

The Supreme Court disagreed, and Justice Kagan, writing for the majority, noted that the grand jury alone has the authority to determine whether there is probable cause, and that decision cannot be reviewed by a judge stating, “a fundamental and historic commitment of our criminal justice system is to entrust those probable cause findings to grand juries.”

This case is notable for its endorsement of defendant’s assets to be “frozen” before a finding of guilt, solely relying on a grand jury’s probable cause indictment. And, despite the jokes about grand juries and ham sandwiches, grand jury proceedings are essentially one-sided; grand jurors hear evidence presented by prosecutors, and no judge is present.

As a result of the ruling, the government has a very clear incentive to seek asset forfeiture even in cases where there is little or no probable cause linking the assets to the crime. This could greatly impact the ability of defendants to exercise their sixth amendment right to counsel, and can cause undue hardship to those who have yet to be found guilty of a crime.

Asset forfeiture is a critical tool in the police arsenal where they can seize cash or property obtained through criminal activity, and in many jurisdictions, use the seizures to directly fund law enforcement’s fight against crime. As Sarah Stillman wrote last year in a New Yorker article exposing the prevalence of asset forfeiture in the United States; its modern form began with federal statutes enacted in the 1970s targeting organized-crime bosses and drug king pins. As part of our nation’s legacy stemming from a proliferation of “tough-on-crime” laws, asset forfeiture gained a foothold in the mid-1980s when Congress passed the Comprehensive Crime Control Act, which established a special fund that turned over proceeds from forfeitures to law enforcement.

Suddenly, police and prosecutors were empowered to seize money and goods tied to the production of illegal drugs. Although the federal government and all but two states forbid asset forfeitures from directly funding officer salaries, there are otherwise very few restrictions under federal and state law on how law enforcement agencies may use the spoils of police seizures.

Kaley v. United States comes at a critical moment, when asset forfeiture is funding crime-fighting activity at unprecedented levels. The Justice Department reports that more than $4.2 billion was deposited in the department’s asset forfeiture fund in 2012; almost quadruple that of previous years. Some of those funds are allocated to crime victims, but most are kept by law enforcement.

All but eight states allow law enforcement agencies to retain a share of the proceeds from asset forfeiture. And out of these 42 states, 26 allow police to keep the full amount of the proceeds. The incentive for states to participate in federal forfeiture programs is significant. States are rewarded for pursuing cases where asset forfeiture is involved and the states can hand over the case to the federal prosecutor. Critics argue that law enforcement agencies face tremendous financial incentives to police for profit, often choosing to pursue crimes that can reap financial rewards for their departments over other, more serious crimes that may not result in asset forfeiture.

Justice Roberts, writing for the dissent, argued against the majority opinion’s argument that taking away sole authority from the grand jury to determine probable cause triggering freezing of assets would undermine the grand jury’s traditional role. If the power to trigger asset forfeiture was removed, he writes, “the traditional roles of the principal actors in our justice system would remain respected: The grand jury decides whether a defendant should be required to stand trial, the judge decides pre-trial matters and how the trial should proceed, and the jury decides whether the defendant is guilty of the crime.” Justice Roberts’ warning should act as a check on the extraordinary use of freezing of assets across our nation, one that carries with it tremendous perverse incentives for cash strapped law enforcement agencies concerned with supplementing their budgets.